Tax ID Numbers are also know as Employer Identification Numbers or EIN. Similar in purpose to the Social Security Number assigned to individuals, EINs are used by employers, sole proprietors, corporations, partnerships, non-profit organizations, trusts and estates, government agencies, certain individuals and other business entities. The IRS uses this number to identify taxpayers that are required to file various business tax returns. Individuals who are employers may choose to either obtain an EIN or use their Social Security Number for the purpose of reporting taxes withheld on behalf of their employees. Contrary to some misconceptions, credit bureaus and credit issuers can tell the difference between SSN and EIN Numbers. SSN Numbers can be validated as to origin and state / year of issuance. The credit bureaus and issuers are highly trained in fraud detection, and increasingly sophisticated algorithms and protections are used. This is why the EIN is not considered sensitive information, and is freely distributed by many businesses by way of publications
and the internet.
An EIN is usually written in the form 00-0000000 whereas a Social Security Number is usually written in the form 000-00-0000 in order to differentiate between the two. There are EIN Decoders on the web that can identify which state the company had registered the EIN Number. A business needs an EIN in order to pay employees and to file business tax returns. To be considered a Partnership, LLC, Corporation, S Corporation, Non-profit, etc a business must obtain an EIN. Those business that do not are considered proprietorships and the Owner / Operator SSN is used on any tax documents.
Can I use my Federal Tax ID as soon as I receive it? Yes. Your North Dakota Tax ID Number can be used immediately for most of your business needs including opening a bank account, applying for local North Dakota business licenses, and filing a tax return by mail.
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